New Republic - Donald Trump inherited an economy from Joe Biden that was perhaps not firing on all cylinders but was in pretty good shape all the same. Real GDP grew at 2.8 percent in 2024. Wages were growing at a higher rate, 4.8 percent. Inflation closed out 2024 at 2.9 percent—high, but way down from the 7 percent of 2021. Compared to the EU and China, the U.S. economy was, as The Economist famously put it right before the election, “The envy of the world.”
....And now, as The New York Times told us Sunday, we’ve hit another grim milestone: The national debt is bigger than the economy. It’s true that presidents of both parties have racked up big debt numbers. In this century, Democratic and Republican presidencies have contributed almost equally to the explosion in the national debt, from around $5.8 trillion at the dawn of the century to $39 trillion today. But only one party carries on about how awful the debt is. So it’s only that party, the Republicans, who are complete hypocrites about it.
As for the current economic mess—it’s virtually all Trump’s doing, in three major ways. First, there are the tax cuts in his one big ugly bill, which have not stimulated the economy in the way Republicans say tax cuts always do. That bill cut rich people’s taxes in several different ways—marginal income tax rate, estate tax, pass-through tax, and more.
Second, it’s the tariffs. It was obvious at the time other countries would retaliate against Trump’s tariffs, which is precisely what they did. The Federal Reserve estimated last fall that tariffs had raised consumer prices overall by 3.1 percent. It’s surely been worse since then, and now, the government is starting to return $166 billion in tariff revenue to importers after the Supreme Court ruled against the tariffs.
Third, of course, is the war in Iran, which has shot gas prices up near $5 a gallon in most places. The price of a barrel of oil today is around $105. What if it hits $150, which seems to many experts not just possible but inevitable if the war continues? That means a gallon of gas in the $6.50 range. And Trump said last week he didn’t care.
So here we go again: For the third straight time, a Democratic president handed a Republican president an economy that was at the least pretty good, and at most (Bill Clinton) really humming along very nicely. And, for the third straight time, the Republican has made things worse. Which also means that Democratic presidents have to clean up messes left by their GOP predecessors.
1 comment:
10 of the last 11 recessionsin the USA have been esacerbated by tax cuts for the rich. There is absolutaly no evidence that tax cuts stimulate the economy and prlenty of evidence that they lead to greater ineqeuality and more disease, both of which harm the economy.
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